Cabinet split over stance on Europe

CABINET DISSENT is being hidden in the debate over the Government's plans to re-enter the European exchange rate mechanism and proceed with ratification of the Maastricht treaty, Tory backbench and Cabinet sources said yesterday.

Although the Cabinet is expected to present a show of unity for the emergency Commons debate on Thursday, Westminster was rife with rumblings of discontent among ministers.

Senior ministers said last night that John Major had tied the hands of dissidents with his statement after the French referendum result indicating that account would have to be taken of anxieties among the British public.

Norman Lamont, the Chancellor, is involved in a battle with the Bank of England and Treasury officials over the extent to which Britain is free to reduce interest rates - a move said by ministers to be supported by Michael Heseltine, the President of the Board of Trade.

Mr Heseltine was challenged on Channel 4 News over reports of dissent by Michael Howard, Secretary of State for Employment, Peter Lilley, Secretary of State for Social Security, and Michael Portillo, Chief Secretary to the Treasury.

He said they had agreed the text of the Prime Minister's statement: 'It's quite wrong to try and divide a Cabinet in this way. You cannot ignore, on the other hand, the way democracy works . . . they all bring their contribution. But the essence is that at the end of that you agree the view, and the way forward, and you stick to it and support it.'

Mr Major also was under increasing pressure from backbenches to sacrifice David Mellor, Secretary of State for National Heritage. One Tory backbench opponent of the Maastricht treaty said: 'There is a seething feeling about the way John Major appears to be protecting his cronies, his old chums. It's all too cosy and a lot are saying Mr Mellor will have to go.'

The backbench Euro-dissidents believe Mr Lamont is on their side and will not call for his head in Thursday's debate. They are planning to table an amendment demanding a veto for Parliament before Britain can rejoin the ERM. They will discuss tactics at a private dinner at a Westminster restaurant on Wednesday.

Underlining the severity of the crisis facing the Government, the executive of the 1922 Committee of Tory MPs is planning to hold a stock-taking meeting on Friday night to assess party morale after the two days of debate.